Research On The Impact Of Tax And Fee Reduction On Local Fiscal Sustainability

The smooth operation of local finance is an important condition for the normal performance of local government functions.The sustainability of local finance has aroused extensive attention.To boost economic development and ease the burden on businesses and individuals,tax and fee reduction policies have been introduced.Under the background of tax and fee reduction,the slowing growth of fiscal revenue,the rigid increase of fiscal expenditure and the increasing risk of local government debt pose challenges to the smooth operation of local government finance.It is meaningful to study the impact of tax and fee reduction on local fiscal sustainability.This paper defines the concepts related to tax and fee reduction and fiscal sustainability,analyzes the mechanism of tax and fee reduction affecting local fiscal sustainability,sorts out the tax and fee reduction policies and effects in different periods,analyzes the current situation of tax and fee reduction affecting local fiscal sustainability,uses the bidirectional fixed effect model,and empirically studies the impact of tax and fee reduction on the sustainability of local finance.The conclusion shows that the tax and fee reduction policy has a restraining effect on the sustainability of local finance in the short term.The influence was significant in the eastern region,but not in the central and western regions.Tax and fee reduction policies will promote the sustainability of local finance in the long term.According to the empirical conclusion,the paper puts forward some suggestions to promote the sustainability of local finance.The central government should speed up the construction of local tax system and improve the transfer payment system.Local governments should improve their ability to collect taxes and fees,strengthen local fiscal expenditure management and strengthen local government debt management.The implementation of these measures will contribute to local fiscal sustainability in the long run.